Pennsylvania’s Casino-Funded Property Tax Cuts: Outdated Calculations and Calls for Reform
Overview of Pennsylvania’s Casino-Backed Property Tax Relief
For nearly twenty years, Pennsylvania homeowners have benefited from decreased property taxes supported by casino revenues. In 2024, the program is expected to distribute over $1 billion to reduce local school taxes, marking the highest level of support since its inception. However, questions have arisen about whether the original methods for calculating these tax relief payments remain accurate and relevant amid changes in the state’s economic and demographic landscape.
Use of Outdated Data in Tax Relief Distribution
The Homestead and Farmstead Exclusion programs, established through the 2006 Taxpayer Relief Act, provide annual school property tax cuts for qualifying homeowners. These programs are financed by taxing slot machine revenues at 34%, which accounted for about $6.4 billion in casino earnings last year. Slot machines contributed roughly $2.4 billion, with online gaming generating a comparable amount.
Despite these substantial revenues, the Pennsylvania Department of Education, responsible for allocating the tax relief funds across 500 school districts, continues to rely on demographic and financial data from 2002. Key factors such as school district wealth, student enrollment, and tax collections have not been updated for over two decades, even though the state’s population and economy have evolved significantly during this period.
This reliance on outdated data leads to disparities in relief distribution. Homeowners in rapidly growing areas may receive less assistance than warranted by their current population growth or increased property values. Conversely, communities with stagnant or declining populations may continue to benefit disproportionately. For example, homeowners in Allentown will save approximately $1,032 on their school tax bills for 2025–2026, whereas residents in the Mars Area School District will see a much smaller reduction of about $102. Similarly, in parts of Westmoreland County where property assessments have not been revised since 1972, tax relief amounts range between $130 and $172.
Growing Demand for Reform in the Casino-Funded Property Tax System
Former state representative and Pennsylvania Gaming Control Board member George Dunbar acknowledges the tangible benefits of the tax relief program, which often go unnoticed by homeowners who have mortgage escrow accounts covering their tax payments.
However, the growth of casino-derived funds has not kept pace with escalating education costs. Experts like Elizabeth Stelle from the Commonwealth Foundation highlight that while casino revenues provide valuable support, they cannot fully compensate for the increasing reliance on property taxes to fund public schools. She also emphasizes that the use of outdated data skews the equitable distribution of these benefits.
Local officials, such as Plum Borough’s financial manager Ryan Manzer, appreciate the consistent funding source but advocate for comprehensive updates to the data used in relief calculations to more accurately reflect current economic and demographic trends. While some lawmakers, including State Senator Jay Costa, believe the existing system remains functional, they concede that a review could enhance fairness. Others argue that the larger challenge lies in reforming the overall approach Pennsylvania takes to fund public education, beyond just the distribution of casino-generated funds.
